Loan Moratorium Waiver of Interest Case: Supreme Court Reserves Judgment

The Supreme Court on Thursday reserved judgment on the pleas pertaining to extension of loan moratorium along with petitions by specific sectors.

A bench of Justices Ashok Bhushan, R. Subhash Reddy & MR Shah finished hearing the batch of plea's today and heard rejoinder submissions on behalf of various petitioners.

Senior Advocate Ravindra Srivastava made rejoinder submissions today on the aspect of discriminatory aspects in the RBI policy for borrowers.

Srivastava also touched upon the implications of the NDMA in the present situation and stated that NDMA has to collect empirical data and make a comprehensive policy. "There can be a partial waiver also but for this there is a need for a calibrated policy under the Disaster Management Act," he said.

Advocate Vishal Tiwari argued that the banks were taking advantage of financial difficulties faced by borrowers even during trying times. He further added that PNB Housing did not follow the Government Advisory.

Senior Advocate VV Giri appearing for RBI stated that if he had a grievance against PNB Housing, then either a aeparate plea needed to be filed or PNB was required to be impleaded.

Earlier, Solicitor General Tushar Mehta had made submissions on behalf of the Centre bench of Justices Ashok Bhushan, R Subhash Reddy & MR Shah, the crux of which were that the the sector specific issues that emanate in the instant petitions could not be granted relief under Article 32.

The law officer stated that the Central Government realised and accepted that there was a problem and that there had to be a solution but that had to be sector specific.

The Centre told Supreme Court that to roll out interest waivers would mean that a huge waiver will be attracted which in turn would affect the economy. "If the banks were to bear this burden, it would necessarily wipe out a substantial and a major part of their net worth, rendering most of the banks unviable and raising a very serious question mark over their very survival", said SG while stating that a blanket waiver of interest would mean foregoing an estimated 6 lac crore.

Justice Bhushan told him at this juncture that the courts were conscious of this and that it would not pass any orders which would shake the economy.

Senior Advocate VV Giri had then appeared for the Reserve Bank of India, arguing that the prudence framework was available in terms of the RBI Circulars.